The main reason the current mortgage market is like the diamond trade is because the Fed’s current policy has been to create the market for mortgage backed securities. The Fed agreed to spend $ 1.25 trillion through the first quarter of 2010 to purchase mortgage bonds, thereby keeping interest rates low and stimulating the housing market.
The video below, How Interest Rates Move, does a great job of explaining interest rates in general and how the Fed’s policy has affected the housing market the up until now.
[youtube]http://www.youtube.com/watch?v=F8mXNBDFCck[/youtube]
This house is great for entertaining; it is like having your own country club in your back yard! A North/South tennis court, pool, and large covered patio with electric awning and pass-through to kitchen make this deep acre lot the place to be.
A large kitchen with granite counter tops, spacious living and dining room, and 5 bedrooms provide a wonderful space for relaxing after a day of fun in the sun.
The S&P Case-Shiller Home Price Index for December will be out on Tuesday followed by the Commerce Department’s new home sales report on Wednesday and existing home sales report on Friday. These three reports will help give Wall Street, and the rest of the country, an idea of how the overall housing market is doing.
Both on a national and local South Florida level, home sales have been improving and in some areas median prices have actually been increasing. Although we have been seeing a trend in increasing sales and decreasing inventories in Miami-Dade County, Moody’s Investor Services estimates there will be an additional 8% decrease in home prices in 2010 due to an increased number of foreclosures, short-sales, and deeds in lieu of foreclosure sales that will be coming on the market. Moody’s estimates are based on loans that are currently in some form of modification process but that will not be eligible for permanent modification.
Sellers and buyers of real estate often fixate on what the price of a property is and in doing so, lose sight of the more important factor, cost. Price is what you get for the property if you are a seller and what you pay for it if you are a buyer. However, what affects both seller and buyer on a monthly basis is the cost. In addition to principal, interest, taxes and insurance costs, there are maintenance costs and maybe association fees.
If you are a seller, consider how much it is costing you to carry that property each month you don’t sell it. Based on the inventory of similar properties in your area vs the number of sales, you can calculate how much it is going to cost you to continue carrying that property for the average number of months it is taking to sell properties in your area. I suggest you cut your sales price and take the loss upfront vs slowly cash out each month.
If you are a buyer, realize that there has never been a better time to buy than right now. You have a large number of options, the interest rates are the lowest they have been in decades and there is the government tax credit that expires at the end of April 2010. If you are waiting for prices to go down lower, consider the cost of owning if the prices go down but the interest rates go up. If prices come down 10% more, but interest rates inch up only 1% your monthly payments are going to be roughly the same.
I just attended a wine tasting at a friend’s home that was put on by AB Fine Wines. We tasted a champagne and several wines from France. In addition to having some very nice wines at extremely reasonable prices, Alex is knowledgeable about a wide variety of wines from all over the world and can work with just about any budget to either help you build your wine cellar or put on a nice evening event.